3 Ideal Dividend Stocks for Your Retirement Portfolio

Given their stable cash flows, solid track record of dividend payments, and healthy yields, these three Canadian stocks are ideal for your retirement portfolio.

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With no paycheques, retirees must find a secondary source of income to meet their needs. Meanwhile, investing in dividend stocks with a solid track record and strong balance sheets is an excellent means to earn a passive income. These stocks are less volatile due to their regular payouts and eliminate the need to sell shares to generate cash flows. Instead of worrying about price movements, retirees can enjoy a reliable and stable income. So, if you are looking for low-volatility dividend stocks to invest in, here are my three top picks.

Algonquin Power & Utilities

Supported by its low-risk utility assets and regulated renewable power-generating facilities, Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN) has been raising its dividend for the last 12 years at a CAGR (compounded annual growth rate) of over 10%. With a quarterly dividend of US$0.1808/share, its yield for the next 12 months stands at a healthy 5%.

It owns and operates a portfolio of 43 renewable power-producing facilities with a combined capacity of 2.5 gigawatts. The company sells 82% of the power produced from these facilities from long-term PPA (power-purchase agreements), shielding its financials from price and volume fluctuations and delivering stable cash flows.

Meanwhile, Algonquin Power & Utilities plans to expand its asset base and make strategic acquisitions to drive growth. So, it expects to invest around US$12.4 billion over the next five years, expanding its rate base at a CAGR of 14.6%. Amid these investments, the company’s adjusted EPS could grow at a CAGR of 7-9%, thus allowing it to maintain its dividend growth.

Bank of Nova Scotia

Another Canadian stock with a solid record of paying dividends is Bank of Nova Scotia (TSX:BNS)(NYSE:BNS). It has been paying dividends uninterrupted since 1833. Given its exposure to high-growth markets, the company’s long-term growth potential looks healthy. Its diversified operations with multiple business segments deliver stable and reliable cash slows, allowing it to pay a dividend at a healthier rate. With a quarterly dividend of $1.03/share, the company’s yield for the next 12 months stands at 5%.

Central banks worldwide have raised their benchmark interest rates amid the inflationary environment. Higher interest rates could broaden the spread between the deposit and lending rates, thus expanding the company’s margins. Credit growth and falling provisions for bad loans could drive its growth in the coming quarters.

Despite its healthy growth prospects and high dividend yield, Bank of Nova Scotia trades at an attractive NTM (next-12 month) price-to-earnings multiple of 9.6, making it an attractive buy.


Fortis (TSX:FTS)(NYSE:FTS) is a utility company that meets the electricity and natural gas requirements of 3.4 million customers across North America. With 99% of its assets operating on long-term contracts, it generates stable cash flows even during a challenging environment, thus making its payout safe. Notably, the company has raised its dividend for the last 48 consecutive years, with its yield for the next 12 months standing at 3.56%. Its average annual total shareholder return for the previous 20 years stands at 13%, which is encouraging.

Meanwhile, Fortis is progressing with its $20 billion capital investment program, which could grow its low-risk rate base at a CAGR of around 6% through 2026. The rate base growth could drive its cash flows in the coming years. Amid these growth prospects, the company’s management expects to raise its dividend at a CAGR of 6% through 2025. So, considering all these factors, I believe Fortis is an excellent addition to your retirement portfolio. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool recommends BANK OF NOVA SCOTIA and FORTIS INC. Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned.

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